Mon, Feb 11, 2019 - Page 7 News List

Breaking Germany’s
coal addiction

Despite its reputation as a climate leader, the most polluting type of coal remains the country’s single biggest source of electricity

By Johan Rockstrom and Owen Gaffney

Moreover, because Germany’s influence extends far beyond Europe, a weak stance on coal could trigger a domino effect — what we call the “road to hell” scenario. US President Donald Trump might cite Germany’s slow action as proof of its double standards on climate change — and even attempt to use it to justify, however weakly, his effort to revive the US coal industry. Brazilian President Jair Bolsonaro might do likewise, as he distances his country from the Paris climate agreement.

Australia, where climate politics are tense and an election is pending, could also be tempted to increase coal use. China and India, too, could become more inclined to expand coal-fired power plants. With that, meeting the 2?C threshold would become impossible, and the devastation of Hothouse Earth would potentially become inevitable.

However, there is good reason to think this will not happen. Even if the 2038 deadline is not ambitious enough, the immediate pace of the coal phase-out follows the carbon law. If Germany implements what it has agreed on paper, one should not underestimate the symbolic value of a coal-dependent industrialized economy setting a clear end date for coal, and locking itself to a quantified phase-out plan. This, together with definitive shorter-term targets, would signal to investors that they can confidently invest in alternative energy sources.

This dynamic could well accelerate the timeline for Germany’s exit from coal. A clause in the agreement creates the potential for an earlier exit from coal. After all, the best-performing major commodities last year were European emissions allowances. Designed to make coal less competitive, those allowances are expected to double in price in the next year or two. Hedge funds and other investors have already taken notice.

A deadline on German coal use would reinforce confidence that the value of allowances will keep increasing, creating a positive feedback loop of rising prices. Add to that a precipitous drop in the costs of wind and solar power, and it is not unrealistic to imagine that the markets will bring about a much faster departure from coal than any policy would.

Sometime in the 2020s, it will become cheaper to build new renewable systems than to continue running existing fossil-fuel plants in parts of Europe. At that point, there will be little chance of stopping the fastest energy transition in history.

Johan Rockstrom is Director of the Potsdam Institute for Climate Impact Research. Owen Gaffney is a global sustainability analyst at the Potsdam Institute for Climate Impact Research and the Stockholm Resilience Centre.

Copyright: Project Syndicate

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